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Asian Market Update – Monday: Asian Shares Rally as China Returns from Golden Week

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China golden week

The Big Question: What kind of signals will the upcoming China Party congress offer for markets?

Asian stock markets rallied on Monday with nice gains seen in the Chinese Mainland and slight increases in South Korea and Australia after the Chinese market reopened after an eight-day National Day Holiday known as the Golden Week.

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On the Chinese Mainland, the Shanghai Composite Index gained 1.24 percent to 3,390 around midday, while the closely watched CSI 300 index, which tracks shares of the 300 largest Chinese companies listed in Shanghai and Shenzhen, jumped 1.85 percent to 3,907.

Analysts attributed the big gains in the Monday morning session to mainland investors’ eagerness to trade following a weeklong market closure last week, despite lower-than-expected service sector data in the country. The Caixin Services Purchasing Managers Index fell to a 21-month low in September to 50.6, down from 52.7 in August. A reading above 50 indicates an expansion in the service sector.

Also, trade was boosted by a decision last week from the People’s Bank of China to cut the reserve ratio requirement (RRR), cash banks are required to hold as reserves, to boost liquidity.

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In Hong Kong, the Hang Seng Index was down 0.38 percent to 28,365 at midday. The Hang Seng Index rallied during the Chinese golden week, as mainland traders flocked to Hong Kong, where markets were open, to trade.

Down Under, the ASX 200 also gained 0.67 percent to 5,748 at midday on Monday.

Japanese and South Korean markets were closed on Monday for local holidays.

Talk of the Day: What will Chinese policymakers signal during the 19th National Congress of the Communist Party of China scheduled for next week? Also, how connected are the markets between the Chinese Mainland and Hong Kong following the establishment of the Shanghai-Hong Kong Stock Connect. Will valuations converge or remain independent of each other as they become more linked?

Also in the news: Fresh signs of rising tensions on the Korean Peninsula emerged after US President Donald Trump tweeted that “only one thing works” in solving the North Korea nuclear issue.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
China-Shanghai Composite Index 3,390.51 1.24%
China- CSI 300 3,907.53 1.85%
Hong Kong –Hang Seng 28,365.08 -0.38%
Australia-ASX 200 5,748.80 0.67%

Cryptocurrencies

Prices of cryptocurrencies saw mixed performance overnight during the Asian trading session on Monday, as the price of bitcoin continued to rally and prices of ethereum and litecoin fell.

At midday in Asia, the bitcoin price was up 0.54 percent to $4,622. Bitcoin price has jumped significantly from about $4,334 on Saturday to surpass the $4,600 mark earlier Monday morning in the Asian trading session.

In a rare moment, the price of ethereum broke with a largely convergent movement with bitcoin on Monday morning, as the it dropped 2.15 percent to $302 at midday in Asia.

Litecoin also saw some losses during the Monday morning session in Asia, as the virtual currency’s price dropped 1.15 percent to $52.42.

Currencies

The Japanese yen gained 0.02 percent against the US dollar at midday Friday to 112.58 per dollar.

The Chinese yuan gained 0.3 percent against the US dollar to 6.6335.

The Australian dollar lost 0.15 percent on the dollar, changing hands at 1.2870 per dollar at midday.

Commodities

WTI Oil was up 0.53 percent to $49.43 per barrel.

Brent Crude gained 0.40 percent to $55.72 per barrel.

Gold was up 0.55 percent to $1,282.89 an ounce.

Business News across Asia

In China, the Chinese government on Monday issued new policy that aims to boost the country’s pharmaceutical industry. The policy said that the Chinese government will accept foreign companies test results and speed up registration process for foreign drugs to enter the Chinese market.

Take away: This is a significant move from China where the drug market is largely off limits to foreign drug-makers. Expect shares of global drug-makers to rise as the news make the round.

Featured image from Zimbio.com

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Market Overview

Welcome to the Party

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The first bitcoin futures contracts are now up and running on the CBOE. The excitement was everything we expected and more.

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Overall, $40 Million worth of volume was added by Wall Street, which comes out to about 0.3% of yesterday’s total volume. A slow but significant start.

The lack of short sellers emboldened the entire crypto-market causing prices of bitcoin and many other tokens to skyrocket towards their all time highs.

CBOE’s circuit breakers that are designed to halt trading should the price swing too wildly kicked in… twice.

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In addition, the CBOE’s website experienced a remarkable surge in visitors causing the website to crash several times and delayed service, though the trading mechanisms held up well.

Welcome to the party. You’ve got a lot of catching up to do.

@MatiGreenspan
eToro, Senior Market Analyst

 

Please note: All data, figures & graphs are valid as of December 11th. All trading carries risk. Only risk capital you’re prepared to lose.

Market Overview

The US Jobs report comfortably beat expectations on Friday causing the stock markets to rise nicely. The momentum seems to have carried through the weekend with Asian markets up this morning and futures pointing to a positive open in Europe.

In addition, the Federal Reserve is expected to raise their interest rates this Wednesday and a fresh round of stimulus from the People’s Bank of China may be on the cards shortly after.

Thursday will be a huge day for Forex traders as we get interest rate announcements from the Swiss National Bank, the Bank of England, and the European Central Bank.

Though the Fed is gradually tightening their belt, money around the world is still cheap and easy, which is why many stock indices are breaking new record highs.

Trouble on the Border

The ground-breaking deal that was reached between the UK and the EU last week hinged heavily on the deal that the UK reached with their neighbors in Ireland. The idea is that the border between Ireland and Northern Ireland will not revert to a hard border.

Meaning, that the UK will need to keep the flow of goods and services into North Ireland following the regulations dictated by the EU. However, over the weekend we saw some controversy as the UK government tried to backpedal a bit on this deal saying that it was contingent on the upcoming negotiations with the EU.

The Irish were notably miffed as they understood these negotiations to be final and we’re now back at a point of contention.

The GBPUSD is once again testing the rising support level that it has been building since early November. So much rests on a comprehensive and favorable deal to be struck.

Crypto Gone Wild

In the old markets, we used to say “buy the rumor sell the news.” In what is being called the new normal we say “buy the rumor buy the news.”

In crypto, we just say “buy everything as much as you can.”

Though this market is extremely risky, investors in this space don’t even seem to notice. With the introduction of Bitcoin futures on Wall Street came a strong and powerful rally across the crypto-world. Out of the top 100 biggest cryptocurrencies, 94 of them are in the green today.

Revision: In Friday’s update we mentioned that there is a chance that the price of the CBOE futures may become disconnected from the rest of the market. A few readers have pointed out that this is not correct.

The CBOE’s XBT futures are actually fixed to the price traded at Gemini.com and are settled in cash daily. The CME Group’s contracts will be a bit more advanced and the price will be set by an index that is derived from several exchange sites.

Regardless of the excitement in the market, we must remember that Wall Street has only so far dipped their toes in the water and it may take a month or two to really understand how much they will be able to impact the prices around the world.

The good news is that the bitcoin miners have been working hard over the weekend and managed to reduce the backlog of unconfirmed transactions. The mempool is back under 100,000. 🙂

Keep a close eye on the all time highs of your favorite coin. If we start seeing any breakouts, there’s no telling how high we might go.

Have an amazing week ahead!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.
The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Market Overview

Asian Market Update – Monday: Bitcoin surges after futures debut; Asian stocks higher on improved sentiment

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Bitcoin futures

The Big Question: How will futures trading affect bitcoin?

Bitcoin posted a huge surge on Monday morning in Asia, after futures contracts began trading on the CBOE Futures Exchange in Chicago on Sunday evening US time.

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On Coinbase, the price of bitcoin gained more than $2,000 in a strong upswing to close to $16,800 before falling back slightly. At midday in Hong Kong, the cryptocurrency was still up about 9 percent to 16,670 in very active trading.

On CBOE, the front-month bitcoin futures contract surged past $17,000 on Monday morning Asian time, according to Reuters.

The debut of bitcoin futures on the CBOE Exchange marks a key step for bitcoin towards adoption in mainstream finance that could boost its legitimacy and acceptance. However, some are worried that serious fluctuations could follow now that the big boys are in on the bet.

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Meanwhile, ethereum was trending up nicely during the Asian trading session on Monday. The cryptocurrency gained 3.89 percent at midday to $464 after losing about $23 in overnight trading.

Litecoin surged nearly 5 percent to $158 at midday, after losing about $9 on Sunday.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 22,871 0.26%
China-Shanghai Composite Index 3,303 0.40%
Hong Kong –Hang Seng 28,784 0.50%
South Korea-KOSPI 2,466 0.12%
Australia-ASX 200 5,999 0.08%
S&P 500 E-Mini Futures 2,656 0.08%

Major Asian equities were pointing higher in somewhat subdued trading on Monday morning, led by gains in Hong Kong and on the Chinese mainland.

In Hong Kong, the Hang Seng Index edged up 0.50 percent to 28,784 at midday after opening flat. On the Chinese mainland, the Shanghai Composite Index also moved up 0.40 percent to 3,303.

Both Hong Kong and mainland markets have had a couple weeks of increased volatility and lower prices following tighter regulations from mainland officials. Still, recent data for foreign trade, consumer inflation, foreign investments, etc. suggested that the Chinese economy remains stable and sound, which could boost business sentiment.

Markets in Japan also moved up, though only slightly. The Nikkei 225 Index gained 0.26 percent to 22,871 before midday on Monday.

In South Korea, the Kospi was 0.12 percent higher to 2,466 at midday.

Down under, the ASX 200 was up a slight 0.08 percent to 5,999 at midday.

The S&P 500 E-Mini Futures was up 0.08 percent to 2,656.

Investors’ risk appetite appears to be improved by positive economic data out of China, Japan and other key economies, an agreement between US political parties that avoided a government shutdown, and progress in tax reform negotiations in the US, among other things.

Important events that the market is watching this week include meetings of the US Fed and the ECB, Brexit talks, NAFTA negotiations, and the first week of bitcoin futures trading.

Currencies

The Japanese yen lost 0.12 percent against the US dollar at midday Monday, changing hands at 113.58 per dollar.

The Chinese yuan firmed 0.06 percent against the US dollar to 6.6155 per dollar.

The Australian dollar added 0.17 percent on the dollar, changing hands at 1.3290 per dollar at midday.

Commodities

WTI Oil was down 0.4 percent to $57.07 per barrel.

Brent Crude was off 0.35 percent to $63.09 per barrel.

Gold was up 0.04 percent to $1,248 an ounce.

News across Asia

In China, Monday marks the 16th anniversary of the country joining the World Trade Organization, which opened the Chinese market to foreign goods and services as well as foreign markets to China. However, China has now filed a suit against the EU and the US for not granting China status as a ”market economy.”

Take away: China has pledged more market access for foreign companies, but the EU and the US are hardly satisfied. The WTO is now hearing the case filed by China, and its decision could have long-last implications for global trade.

In Japan, large Japanese manufacturing companies’ sentiment about economic conditions has improved in the fourth quarter of the year, the official Business Survey Index out on Monday showed. The BSI for large manufacturers came in at 9.7, up from 9.4 in the previous quarter.

Take away: Japanese manufacturing companies have taken a heavy hit after a series of data cheating scandals, but the latest data showed economic growth is robust, and largely held up by demand from overseas.

Featured image from Pixabay.

Disclaimer: The author owns bitcoin, ethereum and litecoin. He holds investment positions in the coins, but does not engage in short-term trading.

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Analysis

Daily Analysis: Stocks Rise on Mixed Jobs Report, Bank gains as Bitcoin Wobbles

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Friday Market Recap

Asset Current Value Daily Change
S&P 500 2651 0.45%
DAX 13153 0.85%
WTI Crude Oil 57.34 1.12%
GOLD 1250.00 0.21%
Bitcoin 15775 -4.10%
EUR/USD 1.1774 -0.01%

The “Week of Bitcoin” ended on a positive note regarding traditional financial assets, with several bullish catalysts helping the recently struggling indices in Europe and the US. Asia settled down after a period of pronounced weakness, the finalized framework of the new regulation of the European banking sector favored the banks, end the US employment report was mixed enough but not too bad to help equities. While these don’t sound that bullish from a long-term perspective, in the world of central bank dependency, a sluggish growth environment fuels the yield-seeking rally in stocks.

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S&P 500 at All-Time Highs, 4-Hour Chart Analysis

Short-term rates declined thanks to the slightly negative economic news, and as Trump’s decision regarding Jerusalem sparked widespread protests in the Middle East, gold and long-dated treasuries rebounded, as a sign of moderate safe-haven flows. The VIX shrugged off the geopolitical fears and stock volatility plunged back near its recent record lows, while the DOW and the S&P 500 finished on new all-time closing highs, even as the intraday highs from Monday are still ahead of the benchmarks.

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Last night’s Brexit deal caused a “sell the news” dip in the Great British Pound even amid the risk-on sentiment, as the currency lost ground compared to its major counterparts, while the rest of the forex complex finished a choppy session close to unchanged on the eventful day.

EUR/GBP, 4-Hour Chart Analysis

Cryptocurrencies

All eyes were still on Bitcoin and the major altcoins as trading activity skyrocketed in the cryptocurrency segment thanks to the exponential rally and the sharp correction in the market of BTC. The coin hit a new all-time high on all exchanges, albeit at widely diverging levels, as several exchanges broke under the weight of the record volumes.

Bitcoin fell as much as $3000, more than 20% top-to-bottom, but as we speak the currency is regaining momentum and we might be in for another interesting weekend in the segment. While it seems very likely that a sharp correction is just around the corner, picking a top in BTC is not an easy feat, even as the momentum indicators are off the charts.

BTC/USD, 4-Hour Chart Analysis

Altcoins benefited from the early sell-off in Bitcoin, and Litecoin even rallied to a fresh all-time high, while the other majors rose significantly as well.  Although the currency and the segment as a whole are stretched by all measures, and the risks of a “fake-out” our high, speculative flows could propel another rally in LTC.

LTC/USD, 4-Hour Chart Analysis

Key Economic Releases on Friday

Time, CET Country Release Actual Expected Previous
1:50 JAPAN GDP 0.6% 0.4% 0.3%
Tent. CHINA Trade Balance 264 bill 231 bill 254 bill
11:30 UK Manufacturing Production 0.1% 0.1% 0.7%
15:30 US Hourly Earnings 0.2% 0.3% 0.0%
15:30 US Non Farm Payrolls 228,000 198,000 261,000

Featured image from Shutterstock

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